A new article that explains why understanding the various forms of home insurance available on the market is important.

1. Larry Weltman: The Value of Home Insurance: Protecting Yourself from the Unthinkable
As early estimates of the damages from the tragic Fort McMurray fire reach the multibillion
dollar level, the importance of home insurance returns front and centre. The quick pace of the
fires that forced Fort McMurray’s evacuation and destroyed more than 100 hectares of the city
and surrounding area highlights how fast an emergency can arise.
Protecting your home, its contents and your belongings with the appropriate insurance can
ensure that in the event of a fire, flood, natural disaster, burglary or accident you are able to
recoup most of your losses. Whether you own a house or a condo, or prefer to rent, home
insurance can help protect the things you own in case of loss or damage.
When you consider all the things you own, clothes, electronics, furniture, collectibles,
keepsakes, etc., replacing everything in the event of a loss can be very expensive. That’s, in
short, where home insurance comes in: it protects you from having to pay to replace all or
some of your valuables. Home insurance also protects you in case someone is injured on your
property and needs medical care.
While insurance fosters peace of mind, it’s crucial that homeowners understand their policy
and have adequate and appropriate insurance. There have been flooding cases across the
country where the infrastructure has caused water to back up and flood homes. Some
homeowners who did not practice due diligence found out they were not covered for floods
originating in the piping. This left them wet from the flood waters and out of luck in terms of
reimbursement.
Here is a brief explanation of the various types of insurance available to homeowners to help
decipher which coverage you need and what you are entitled to in the event of a claim.
Hazard Insurance

2. Hazard insurance protects you against unintentional damage or destruction to your house or its
contents, including fire, storm, theft, vandalism and similar threats. Depending on your plan
and coverage, it can cover the cash value of the damages or the replacement value. It’s
important to note, the replacement value pays enough to replace what you lost, but cash value
only pays what the property would currently be worth. For instance, the cash value of a five-
year-old television that cost $1,000 won't be $1,000 because it depreciates with age, making it
worth less in from the point of view of the insurer.
Hazard insurance is very nuanced and I advise homeowners to carefully read through their
policy and discuss their specific needs with their broker to avoid a headache later on.
Liability Insurance
Liability insurance protects guests and visitors to your property by covering personal liability for
accidents on your property. If your neighbour’s child trips on a hose in your yard and breaks his
ankle, liability insurance will pay for his medical expenses up to the policy limit. Liability
insurance would also cover handymen who may slip off a ladder or hurt themselves installing or
fixing something on your property.
Special Insurance
Homeowners insurance covers most of the property in your home, but there are limits to what
the insurer will pay for certain items, such as cash or jewelry. If you have a home office, hazard
insurance doesn't cover business equipment losses either. If you have personal or business
property that isn't covered, you can purchase a special supplemental policy that will protect the
loss of those items.
Aside from loss why is it important to have insurance?
It’s mandatory if you hold a mortgage. If you take out a mortgage, your house is the lender's
collateral, so your lender will require you to buy at least minimum level hazard insurance. That

3. doesn't prevent you from buying a greater amount of insurance to protect your items,
however.
Disclaimer: The views expressed here are solely those of the author. The author rakes
no responsibility for any damages of any kind incurred or suffered as a result of the use
or reliance on his views expressed in this article. Readers should consult with a
professional insurance broker with regard to all their insurance needs